Wong Weng Foo v HUP HUAT CONSTRUCTION AND ENGINEERING SDN BHD (In Liquidation) PENCELAH PECCA LEATHER SDN. BHD. PIHAK TERKILAN OOI LEE WEI

Case Significance

Illustrates the accountability of a liquidator as an officer of the court: a liquidator must obtain the court's sanction for his remuneration and cannot retain company money towards his fees without authority, and where he does so he may be ordered to return the funds and bear the costs of the challenge personally.

This High Court decision in the Commercial Division at Kangar concerns a liquidator's application for remuneration and his obligation to obtain the court's sanction. The applicant was the liquidator of a construction and engineering company in liquidation, and he applied, in a post-winding-up application invoking section 479 of the Companies Act 2016 and its predecessor in the Companies Act 1965, in connection with his remuneration. An intervener and an aggrieved party opposed the application. The liquidator first raised a preliminary objection, which the court dismissed. On the substance, the governing principle is that a liquidator's remuneration and the retention of company funds towards it are not matters for the liquidator to determine unilaterally; the proper course is to apply to the court to obtain sanction. The court found that the liquidator had not obtained the requisite sanction and that his application for remuneration could not be allowed. It dismissed the application with costs of RM10,000 each to the intervener and the aggrieved party, and — as recorded in the orders made — required the sum the liquidator had retained to be paid back to the company, holding the liquidator personally responsible for the costs. Delivered by Dr Arik Sanusi bin Yeop Johari J, the judgment is a useful illustration of the accountability of a liquidator as an officer of the court: a liquidator must obtain the court's sanction for his remuneration and cannot simply retain company money towards his fees, and where he does so without authority he may be ordered to return the funds to the company and to bear the costs of the challenge personally, reinforcing the fiduciary and supervisory controls over those who administer insolvent estates. The decision reinforces that the remuneration and conduct of a liquidator remain subject to the court's supervision throughout the winding up, and that creditors and other interested parties may hold a liquidator to account where company money is dealt with otherwise than in accordance with the statutory scheme.